Nix et al v. Major League Baseball et al

Filing 33

OPINION & ORDER re: 20 MOTION for Permanent Injunction: Although Defendants' frustration with Plaintiffs' vexatious litigation is understandable, it cannot justify the relief sought here. Accordingly, for the reasons set forth above, IT IS HEREBY ORDERED that Defendants' motion for an injunction is DENIED. The Clerk is respectfully directed to terminate the motion pending at document number 20. (Signed by Judge Richard J. Sullivan, Sitting by Designation, on 11/4/2020) (jwh)

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 1 of 8

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

NEIMAN NIX, et al.,
Plaintiffs,
-v-

No. 17-cv-1241 (RJS)
OPINION & ORDER

OFFICE OF THE COMMISSIONER OF
BASEBALL, d/b/a MAJOR LEAGUE
BASEBALL, et al.,
Defendants.

RICHARD J. SULLIVAN, District Judge:
Defendants Major League Baseball (“MLB”), Robert D. Manfred, Jr., Allan H. “Bud”
Selig, Neil Boland, and Awilda Santana (collectively, “Defendants”) seek a permanent injunction
under the All Writs Act and the Anti-Injunction Act enjoining Plaintiffs Neiman Nix and DNA
Sports Performance Lab, Inc. (“DNA Sports Lab”) from litigating an action in Florida state court
for alleged violations of Florida’s Uniform Trade Secrets Act (“FUTSA”). (Doc. No. 21 at 1–2,
7.) For the reasons set forth below, the motion is DENIED.
I. Background
Nix, a current resident of Florida, played professional baseball within the Milwaukee
Brewers and Cincinnati Reds organizations until 2003. (Doc. No. 22-1 ¶¶ 2, 15.) In 2006, Nix
founded the American Baseball Institute, a player development academy based in Clearwater,
Florida. (Doc. No. 1-1 ¶¶ 13–14, 16.) In 2012, Nix established DNA Sports Lab, a Florida
corporation headquartered in Miami Beach, Florida, which Nix describes as “a state-of-the-art
sports science facility for human performance.” (Doc. No. 22-1 ¶ 21.) According to Nix, DNA

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 2 of 8

Sports Lab “specializes in the research and development and sale of natural substances to serve as
a legal alternative to harmful performance enhancing drugs.” (Id. ¶ 22.)
While the parties have an extensive history of litigation, which includes numerous suits in
both Florida and New York, the Court discusses only those cases directly relevant to this motion.
On November 9, 2016, Plaintiffs filed suit against Defendants in New York Supreme Court,
alleging tortious interference with business relations, defamation, and violations of the federal
Computer Fraud and Abuse Act (“CFAA”). (Doc. No. 1-1.) In support of the CFAA claim,
Plaintiffs alleged that MLB “began hacking/attacking DNA Sports Lab’s social media accounts,”
including PayPal, which “severely disrupt[ed] Nix’s ability to do business.” (Id. ¶ 79.) Plaintiffs
also insisted that Defendants “hacked into and destroyed” Nix’s former attorney’s computer in
retaliation for filing the complaint. (Id. ¶ 80.) On February 17, 2017, Defendants removed the
case to federal Court on the basis of federal question jurisdiction over Plaintiffs’ CFAA claim,
while asserting supplemental jurisdiction over Plaintiffs’ state law tort claims. See 28 U.S.C.
§§ 1331, 1367(a), 1441(a). On February 27, 2017, the day the case was assigned to the Court’s
docket, the Court issued an order directing Plaintiffs to file either a motion to remand pursuant to
28 U.S.C. § 1447(c) or an amended complaint conforming to the pleading standards under Rule 8
of the Federal Rules of Civil Procedure. (Doc. No. 6.)
In response, Plaintiffs moved to voluntarily dismiss the CFAA claim pursuant to Federal
Rule of Civil Procedure 41(a)(2) and to remand the remaining claims to state court pursuant to 28
U.S.C. § 1447. (Doc. No. 13.) They also submitted a proposed stipulation voluntarily dismissing
their CFAA claim with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).
(Doc. No. 13-4.) On July 6, 2017, the Court granted both motions. (Doc. No. 19 at 1.) In doing
so, the Court noted that because Defendants did not join the proposed stipulation, it had no legal

2

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 3 of 8

effect, since Rule 41(a)(1)(A)(ii) requires that a stipulation of dismissal be “signed by all parties
who have appeared.” (Id. at 4 (quoting Fed. R. Civ. P. 41(a)(l)(A)(ii)).) Nonetheless, the Court
granted the motion under Rule 41(a)(2), which allows it to dismiss a complaint “upon such terms
and conditions as the court deems proper,” because Plaintiffs were willing to dismiss with
prejudice and Defendants could not articulate any harms that they would suffer as a result. (Id. at
5 (quoting Catanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001)).) On remand, the New York
Supreme Court granted Defendants’ motion to dismiss the complaint. (Doc. No. 21 at 5.)
On January 25, 2019, Plaintiffs brought a new action in Florida state court, alleging that
MLB violated Florida’s Computer Abuse and Data Recovery Act (“CADRA”) by accessing
Plaintiffs’ PayPal account and computer. (Doc. No. 22-7 at 16–23.) Defendants moved to dismiss
on several

grounds – including that CADRA, which took effect in 2015, does not apply

retroactively. (Doc. No. 21 at 6.) Based on an agreement among the parties, the state court granted
the motion and dismissed the claim without prejudice. (Doc. No. 22-8.) Plaintiffs then filed an
amended complaint alleging that Defendants violated FUTSA, again based on the alleged PayPal
hacking incident. (Doc. No. 22-1 at 26–28.) Defendants once more moved to dismiss, arguing
that the claim was time-barred and precluded under res judicata. (Doc. No. 21 at 7.) The Florida
state court denied Defendants’ motion in part, and most Defendants remain in that case. (Doc. No.
22-9.) Having lost their motion in Florida state court, Defendants now return to this Court – in an
action that was closed more than three years ago – seeking an injunction to bar the Florida state
court action pursuant to this Court’s authority under the All Writs Act and the relitigation exception
to the Anti-Injunction Act.

3

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 4 of 8

II. Discussion
The All Writs Act authorizes a federal court to “issue all writs necessary or appropriate in
aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C.
§ 1651(a). But this power is not boundless: Under the Anti-Injunction Act, federal courts
generally “may not grant an injunction to stay proceedings in a State court.” 28 U.S.C. § 2283.
The Anti-Injunction Act’s unmistakable message – indeed, its “core message” – is “one of respect
for state courts,” as the Act “broadly commands that those tribunals shall remain free from
interference by federal courts.” Smith v. Bayer Corp., 564 U.S. 299, 306 (2011) (internal quotation
marks omitted). Although the Anti-Injunction Act lists some exceptions to its broad command,
these “exceptions are narrow and ‘not to be enlarged by loose statutory construction.’” Chick Kam
Choo v. Exxon Corp., 486 U.S. 140, 146 (1988) (alteration adopted) (quoting Atl. Coast Line R.R.
Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 287 (1970)).
At issue here is the so-called relitigation exception to the Anti-Injunction Act, which
authorizes federal courts to grant an injunction “to protect or effectuate its judgments.” 28 U.S.C.
§ 2283. While the relitigation exception is “designed to implement ‘well-recognized concepts’ of
claim and issue preclusion,” courts have “taken special care to keep it ‘strict and narrow.’” Bayer,
564 U.S. at 306 (quoting Chick Kam Choo, 486 U.S. at 147–48). Indeed, “an essential prerequisite
for applying the relitigation exception is that the claims or issues which the federal injunction
insulates from litigation in state proceedings actually have been decided by the federal court.”
Chick Kam Choo, 486 U.S. at 148 (emphasis added); see also Staffer v. Bouchard Transp. Co.,
878 F.2d 638, 643 (2d Cir. 1989).
As a result, the relitigation exception is “more narrowly tailored than the doctrine of res
judicata.” Staffer, 878 F.2d at 643. It does “not permit[] . . . preclusion of claims that, while not

4

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 5 of 8

litigated, arose from the same common nucleus of operative facts as the litigated claim.” Smith v.
Woosley, 399 F.3d 428, 434 n.8 (2d Cir. 2005). Instead, the relitigation exception turns on what
legal standards the federal court used as compared to the state court: If the legal standards differ,
the two courts would not actually decide the same issue – meaning the relitigation exception does
not apply, even if the action would be barred under the doctrine of res judicata. Bayer, 564 U.S.
at 309–10.
That said, the relitigation exception may nevertheless apply “where collateral estoppel
applies.” MLE Realty Assocs. v. Handler, 192 F.3d 259, 262 (2d Cir. 1999); see also Staffer, 878
F.2d at 644 (“The district court, however, had the discretionary authority to enjoin the state court
proceedings for jeopardizing the collateral estoppel effect of its judgment.”). So even where a
federal court may not enjoin a state action in its entirety, it may enjoin litigation of specific issues
– but only when those issues were “actually litigated and resolved in a valid court determination
essential to the prior judgment.” Wyly v. Weiss, 697 F.3d 131, 141 (2d Cir. 2012) (internal
quotation marks omitted); see also Staffer, 878 F.2d at 644.
Applying these principles here, it is clear that the Court did not actually decide any claims
or issues that would permit it to issue an injunction. Defendants point primarily to principles of
res judicata, arguing that an injunction is warranted because Plaintiffs’ FUTSA claim merely
“repackag[ed]” the CFAA claim that the Court dismissed with prejudice in 2017. (Doc. No. 21 at
7.) Specifically, Defendants contend that, because both the CFAA and FUTSA claims reference
the alleged hacking incident, “the Florida Litigation deals with the same nucleus of operative facts
as the CFAA claim” and therefore falls within the relitigation exception. (Id. at 10.) But the fact
that claims may deal with the “same nucleus of operative facts” is simply irrelevant if the claims

5

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 6 of 8

were not actually decided in the prior litigation. See Woosley, 399 F.3d at 434 n.8; Chick Kam
Choo, 486 U.S. at 148.
Here, the Court plainly did not actually decide the CFAA claim. It is true, as Defendants
contend, that dismissal with prejudice technically constitutes a judgment “on the merits.” See,
e.g., Fitzgerald v. Alleghany Corp., 882 F. Supp. 1433, 1435 (S.D.N.Y. 1995) (“A dismissal with
prejudice pursuant to Fed. R. Civ. P. 41(a)(2), as occurred here, is a final judgment on the merits
favorable to the defendant.” (citing Nemaizer v. Baker, 793 F.2d 58, 60 (2d Cir. 1986)). But that
does not mean the claim was actually decided for the purposes of the relitigation exception.
Instead, the Court dismissed the CFAA action with prejudice because Plaintiffs expressed a
willingness to do so, and the Court explicitly acknowledged that the remaining claims, which
concerned the same facts, would be litigated in state court. (Doc. No. 19 at 5.) It further
emphasized that the parties had not even begun discovery in federal court, so Defendants would
not be significantly prejudiced by remand. (Id. at 7.) Accordingly, while the Court’s 2017
dismissal may have res judicata implications, it does not allow the Court to issue an injunction
under the relitigation exception.
And even if the Court had actually decided the federal CFAA claim, an injunction would
still be inappropriate because it did not decide the state law FUTSA claim. Again, the proper
inquiry under the relitigation exception is not whether Plaintiffs could have brought this claim
earlier, but rather whether the claims employ the same legal standards. FUTSA and CFAA clearly
do not. For example, to succeed on their CFAA claim, Plaintiffs would have to prove more than
$5,000 in “economic damages” within a single year and show that Defendants used a computer
“in

or

affecting

interstate

or

foreign

commerce

or

communication,”

18

U.S.C.

§ 1030(c)(4)(A)(i)(I), (e)(2)(B), (g), whereas neither showing is required for an FUTSA claim, Fla.

6

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 7 of 8

Stat. § 688.801–09. At bottom, the Court did not actually decide the CFAA claim, much less the
FUTSA claim.
Nor did the Court actually decide any subsidiary facts or issues that could be considered
“essential to the prior judgment” under the collateral estoppel doctrine. Wyly, 697 F.3d at 141.
When a judgment is “unaccompanied by findings,” it does “not bind the parties on any issue . . .
which might arise in connection with another cause of action.” Lawlor v. Nat’l Screen Serv. Corp.,
349 U.S. 322, 327 (1955); see also Marvel Characters, Inc. v. Simon, 310 F.3d 280, 289 (2d Cir.
2002). In dismissing the case, the Court did not make any specific findings regarding the issues
or facts underlying Plaintiffs’ case. In fact, the Court presumed all non-jurisdictional facts in
Plaintiffs’ complaint to be true. (Doc. No. 19 at 2 n.1.) Therefore, principles of collateral estoppel
also do not merit an injunction under the relitigation exception.
In sum, the Court plainly lacks authority to enjoin the litigation of Plaintiffs’ state law
claim or any specific issues relevant to that case. Nothing was sufficiently litigated in this Court
such that the Court could enjoin the relitigation of it. The Court therefore declines to address
whether, even if it had the power to issue an injunction, it would exercise its discretion to do so in
this case. See Staffer, 878 F.2d at 644 (affirming that the “injunction of state court proceedings
. . . is discretionary”).

Instead, the state court in Florida was the proper forum to decide

Defendants’ res judicata arguments.
III. Conclusion
Although Defendants’ frustration with Plaintiffs’ vexatious litigation is understandable, it
cannot justify the relief sought here. Accordingly, for the reasons set forth above, IT IS HEREBY

7

Case 1:17-cv-01241-RJS Document 33 Filed 11/04/20 Page 8 of 8

ORDERED that Defendants’ motion for an injunction is DENIED. The Clerk is respectfully
directed to terminate the motion pending at document number 20.
SO ORDERED.
Dated:

November 4, 2020
New York, New York
____________________________________
RICHARD J. SULLIVAN
UNITED STATES CIRCUIT JUDGE
Sitting by Designation

8